Follow the money
Every six months or so, an article comes out saying that, despite ideas to the contrary, millennials love suburbs, not cities. What these articles seldom mention is the socioeconomic composition of these suburbaphiles. While populations boom in the burbs, educated elites still have a strong preference for cities, according to data recently released by City Observatory. They state, for example, that “the number of well-educated young adults living in the nation’s largest cities increased 19 percent between 2012 and 2016, about 50 percent faster than the increase outside these large cities.”
The proximity-enabled network effect of cities can be an economic multiplier, which is a strong draw for money-loving people and businesses alike. In contrast, many suburbs have fewer opportunities and may be over-reliant on a handful of large employers. And even though homes are typically more affordable, when lower wages and higher transit costs are factored, the suburban economic advantage is eroded. These conditions might help explain why suburban poverty rates in the early aughts were double those of cities.
While many people truly prefer suburbs, it’s also true that many others want to live closer to urban cores but simply cannot because there are no market-rate housing options that are affordable and attractive. Hell, lots of the educated elite can’t afford city-living. The universe belongs to whoever can provide those housing options in a timely and economical manner.
Autonomous vehicles and flat earth property values
One thing that will surely affect our orientation to the city mouse/suburban mouse real estate and economic divide are new forms of mobility. It’s said that ride-hailing apps are already having a flattening effect on residential real estate values in NYC. Because getting around is so easy, one-percent New Yorkers are doing the unthinkable: cross-shopping properties in the East 70s with those in the West 80s!
But ride-hailing will be gentle kneading compared to the rolling pin of autonomous vehicles (AVs). Locations that were unthinkably far away when accessed in regular vehicles will become thinkable in AVs—it’s the difference road-raging during your 1.5 hour commute or binge-watching Narcos.
Quantifying this changing orientation to location is exactly what Phil Levin’s new consultancy 99mph is doing. He expects a $1 trillion movement of capital due to AVs flattening effect on real estate. And though full autonomous vehicles are a few years off, the long horizon of real estate investment makes this a timely concern.
What I really want to know is, are you going to build my way?
Robbie Antonio is a Filipino self-portrait collector, Trump friend, and real estate mogul (or the scion of one…not clear). He’s also the dude behind Revolution Pre-crafted Properties, a company offering design-y prefab homes that can supposedly be shipped anywhere in the world. Their portfolio features designs from starchitectural offices such as Libeskind Design and that of Jean Nouvel.
RRP is now getting in the city-building business with a development called “Batulao Artscapes.” BA will be “The World’s First Livable Art Park” (we know how many people want to live in art parks).
BA sits on 346 acres 50 miles outside Manilla away from any coasts. It will, according to CNN, feature “12 different styles of [factory-built] home[s] set across four ‘villages.’….residents can choose from prefabs designed by notable creatives, from artist David Salle to the musician-turned-interior-designer Lenny Kravitz.”
So far as we know, this is the largest prefab development ever conceived. The project’s ambitions are only matched by the number of unanswered questions we have: ones like who, in a country with a per capita GDP of $3K, is going to buy funky modernist homes costing $50K-$1M (USD) set Florida-retirement-community-style in the middle of a jungle?
With a completion date said to be in 2020, our questions may soon be answered.